By Tyler Durden
Turkish Lira Surges After Central Bank Cuts Rates More Than Expected
While the Turkish lira’s status as the world’s favorite carry currency is disappearing with every central bank rate cut, today’s news that the CBRT cut rates by a more than expected 325bps from 19.75% to 16.5% (consensus expected a 17.25%), although less than the whispered 500bps (following Erdogan’s warning that a major rate cut was coming), and down from a recent high of 24%…
… was enough to send the USDTRY tumbling – at least in initial kneejerk reaction – from 5.75 to 5.6830, after the central bank forecast inflation dropping beneath its July forecasts therefore expecting it to get back to target quicker than previously and signalling a normalizing economy following last years lira crisis.
While the rate cut was greater than expected, with Turkey’s inflation now surprisingly running far slower than most had expected in recent months, at just 15%, the real rate is still a solid 1.5%, even if it moves Turkey toward the end of the pack of major EMs in terms of real rates. Of course, how much the inflationary print is accurate, and …read more
Source:: Zero Hedge